Elena Salgado said that the VAT hike will have no adverse effects on Spain’s economy

"In Spain we will see the same, and on an year average, the VAT rise will have no effect," said the minister, who rejected the possibility that the increase would slow the economy in the long term

Elena Salgado said that the VAT hike will have no adverse effects on Spain’s economy

The second vice president and minister of Finance, Elena Salgado, estimated today that the increase in VAT to be implemented from July would not have adverse effects on the economy.

In an interview on Onda Cero, collected by Efe, Salgado explained that in countries where VAT has been raised, such as Germany or Britain, the purchase of durable goods, such as a washing machine or a car, accelerated in the quarter before the rise, and fell in the quarter due to the increase, however it recovered in the following quarter.

"In Spain we will see the same, and on an year average, the VAT rise will have no effect," said the minister, who rejected the possibility that the increase would slow the economy in the long term. "Nobody likes to raise taxes and the government would love to not have to, but the economic situation requires it," said Salgado, who said that the VAT hike will raise an additional € 8,000 million a year.

After being asked about whether the surge in VAT will be maintained once the economy recovers, Salgado simply noted that in 2013 the tax burden in Spain is 34%, the same as in 2004 and lower than in 2007 (37% ), to which she added that Spanish VAT is the second lowest in Europe behind Luxembourg.

As approved by the Executive the standard rate of VAT will rise by 2 points to 18%.



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